More Unemployment Benefits Don’t Boost Job Growth, Congresswoman Says

September 9, 2011 - 3:02 PM

Washington (CNSNews.com) – Despite what the White House says, unemployment benefits do not spur job growth, said Rep. Marsha Blackburn (R-Tenn.).

“Unemployment benefits are not gong to create jobs,” Blackburn told CNSNews.com after President Barack Obama delivered his jobs speech Thursday night to a joint session of Congress. “We’ve heard from so many of our employers that they are an impediment to jobs growth because there may be positions that could be filled or jobs that would be created. And it is a deterrent for individuals applying for or taking those jobs many times.”

Part of Obama’s jobs proposal included extending unemployment benefits for out-of-work Americans, while at the same time proposing to reform the system to include reemployment assistance. That is a work-sharing system to encourage employers to keep more workers on part-time instead of layoffs, giving states flexibility on unemployment insurance and establishing “Startup Assistance” for states to help long-term unemployed workers create their own jobs by starting their own small businesses.

marsha blackburn

U.S. Rep. Marsha Blackburn (R-Tenn.) (Photo from Blackburn's Web site)

On Aug. 10, White House Press Secretary Jay Carney claimed that unemployment benefits boost job growth.

Wall Street Journal reporter Laura Meckler asked Carney, “I understand why extending unemployment insurance provides relief to people who need it, but how does it create jobs?”

Carney acted surprised to get the question.

“I would expect a reporter from the Wall Street Journal would know this as part of the entrance exam just to get on the paper,” he said. “But the -- no, seriously. It is one of the most direct ways to infuse money into the economy because people who are unemployed and obviously aren’t earning a paycheck are going to spend the money that they get.”

“They're not going to save it; they're going to spend it,” said Carney. “And unemployment insurance, that money goes directly back into the economy, dollar for dollar virtually. So it is -- and when it goes back in the economy, it means that everywhere that those people – every place that that money is spent has added business. And that creates growth and income for businesses that then lead them to making decisions about job -- more hiring. So there are few other ways that can more directly put money into the economy than providing unemployment insurance.”

The reporter then asked, “Why since it's been extended have we seen unemployment not drop, in fact?”

Carney said, “Well, look, this is ‘what would have happened argument.’ But we have seen is, what is it, 2.4 million private sector jobs created.  And this year there’s -- I mean, again, this is not just -- I encourage you, and I know that you all have good contacts in that world, but economic analysts wholly unaffiliated with this administration would tell you, and told you back late last year, that the combination of the payroll tax cut and extension of unemployment insurance would have a direct, measurable impact on job creation.”

“So that of the jobs created this year, a certain number -- however many tens or hundreds of thousands of jobs -- can be attributed to those actions taken and pushed by the president last year, which is why he feels so strongly they ought to be done again as we continue to emerge from this recession,” said Carney.

Rep. Blackburn said the president’s proposal was disappointing.

“It was disappointing to hear so much of the same once again even though we’re hearing that former Speaker [Nancy] Pelosi banned the use of the word stimulus,” said Blackburn. “I think everybody listening to it said, ‘wait a minute, this sounds like another stimulus bill,’ which of course it would be.”

In his address to Congress, Obama said the weak U.S. economy and high unemployment  should not mean reducing spending and rolling back too many regulations that he believes are needed.

“We shouldn’t be in a race to the bottom, where we try to offer the cheapest labor and the worst pollution standards,” Obama said. “America should be in a race to the top, and I believe we can win that race.”

Blackburn said Republicans had no intention of a race to the bottom but that the GOP wants to free the economy to improve.

“When you’re empowering small businesses, when you’re empowering individuals, when you’re empowering middle-income workers, that is not a race to the bottom,” Blackburn told CNSNews.com. “That is freeing up people to develop the businesses and the plans and the ideas and the concepts that they have. That’s the way that we have built this country. I don’t think Washington is the solution on this. I think that great, American entrepreneurial spirit is the solution to this.”